The 'Black June' is coming to an end, and the market has finally stopped falling and stabilized at the end of the month. However, the market situation this month has left practitioners with lingering fears.
In June, the industrial silicon market remained sluggish, with futures prices falling to the 7000 mark at one point. The significant reduction in costs has given individual factories room to make concessions. However, the terminal demand is not awesome. The room temperature glue is in the traditional off-season, and the high temperature glue is dragged down by the tariff war, both of the two demand positions are frustrated. The situation of receiving orders in the middle and lower reaches is poor, and inventory digestion is slow. However, the operating rate of individual factories exceeds 70%, and the risk of accumulating inventory has sharply increased. Under the dual pressure of weak demand and high supply, individual factories can only choose to trade price for quantity.
Shandong monomer factory has become the "vanguard" of price decline, with prices dropping from 11400 yuan/ton to 10300 yuan/ton at the end of the month, a drop of 1100 yuan. Other individual factories have also followed suit, with unprecedented fierce bidding, which has made mid to downstream enterprises who were full of confidence in buying at the bottom in May complain and exclaim that they cannot afford to be hurt. As of June 30th, the mainstream quotation for DMC was 10300-10800 yuan/ton, with a monthly decline of 9.4%. The average price in June decreased by 8.88% compared to the previous month.
However, there have also been some positive signals in the market. Upstream companies have accumulated pre-sale orders in the bidding process, and leading manufacturers are secretly making efforts to grab orders. Pre sale orders for raw rubber and 107 rubber can even be scheduled until the end of July. The wind vane device in Shandong is still under maintenance, and the pressure on the supply side has eased to some extent. Moreover, industrial silicon futures have rebounded significantly, returning to the 8000 mark, adding confidence to the rise in spot 421 metal silicon prices. What is more noteworthy is that major factories in Xinjiang suddenly reduced production last week, with nearly 30 furnaces shut down, affecting daily output of about 1500 tons. The duration of the production reduction is still uncertain, but this undoubtedly provided positive support for the industrial silicon market in July and to some extent supported the price increase of individual factories.
In June, although there was no extreme situation of "free shipping for 9.9 yuan" in the silicone market, the round after round of low prices still made people feel heartbroken. Overcapacity and weak demand, selling organic silicon at such low prices is truly a tragedy for the industry. Today is both the last day of June and the closing day of the first half of the year. It is widely believed in the industry that the current DMC price is at a low level for the year. Although it still faces the challenge of reshuffling in the second half of the year, the bottom of the price is expected, and there may be a reversal in August and September, ushering in a new turning point. Let's wait and see if the silicone market can start a rebound in July.